Sick Of Head-Fakes and Other Losing Trades? Here’s The Solution

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Sick Of Head-Fakes and Other Losing Trades? Here’s The Solution

One of the biggest frustrations for traders is entering a trade, only to see it immediately reverse against them. That’s why I developed the Hawkeye Heatmap indicator. Its purpose is to give an objective indication of the strength of a trend. By entering trades in the direction of a strong trend, Hawkeye traders can significantly boost their profits and reduce their losses.

In this week’s article, I’ll show several examples of how the Heatmap works and how easily it reveals the strength of the underlying trend.

Let’s begin our discussion with this first chart of the E-mini (from July 3, 2015).

Emini Chart

The Heatmap (on the bottom) takes the three variable inputs from the Hawkeye Trend — conservative, normal and aggressive, and shows you visually when all three trends have locked into place. This gives you a clear view of the overall market sentiment and quantifies risk.
Heatmap works in all timeframes and displays four color variations:

  • RED – The markets are in a strong downtrend and bearish
  • GREEN – The markets are in a strong up trend
  • DARK RED OR DARK GREEN – one or two of the trend speeds have locked out of the trend, and the market may be pausing into a congestion area or reversing.

In the example above (where I have the number 1), it shows that the trend is in congestion, as you can see by the white dots.

But, if you look at the Heatmap underneath, it’s in dark red, which is telling us that the bias is to the downside, however, all three trends are not in sync. So, if you want a safer entry, you would wait until point number 2, where the Heatmap goes bright red, and then down it goes.

Similarly, let’s consider the long entry as marked by numbers 3 and 4.

You can see that the trend has gone from bright red to dark red, showing us that the trend is weakening. One or two of the trends have clicked out (hence that’s why it goes to the darker red at point three).

And then, at point 4, the Heatmap goes bright green, and up it goes.

At the number 5, you can see the trend goes flat, the Heatmap goes dark color (telling us that the trend momentum is stalled), and the bias is still to the long side.

Then, at number 6, Heatmap goes bright read and prices immediately drop.

Now, the next example is the weekly chart of Apple, the most widely held stock in America.

Apple Weekly Chart

And again, you can see at point 1, we have two dots of white, and then, the Heatmap goes dark red, followed by bright red. And bang! Down it goes. At the number 2, the Heatmap goes from bright red to dark red, showing that the trend strength is dissipating. And then, it goes bright green and bang! Up it goes. The same for point 3, where you see the Heatmap goes dark red, showing us that we are in a trend pause. We have entered congestion, and at point 3, Bang! The Heatmap goes green, and up it goes.

At point 4, although white dots come in (showing us that the trend is going flat), the Heatmap gives you the confidence to stay in this trend and continue on up, because it is just saying everything is in place.

Lastly, let’s consider the daily chart of Crude.

Crude Daily Chart

You can see that at point 1, we have gone into a trend congestion, and our Heatmap has gone dark red. Then, at point 2, the Heatmap goes bright green, and off we go up to point 3.

At point 3, you can see that the Heatmap has gone dark green, showing us that the strength has gone out of this up move. Although the bias is still to the upside, there is no momentum in this. And the circle that I have drawn around three all the way across to four is something that took me many hours to perfect and find out the answer.

And, I haven’t seen any other software out there that would run for that length of time just showing congestion. Then, at point 4, the Heatmap goes bright red and Bang! In it comes, and the market starts selling off.

So in summary, the Hawkeye Heatmap solves one of the biggest frustrations for traders. That of entering a trade, only to see it immediately reverse against them. By simply entering trades in the direction of a strong trend, Hawkeye traders can significantly boost their profits and reduce their losses.

Now, all of this (and much more) is demonstrated in our Wednesday room by my colleague Randy Lindsey.

So, I cannot encourage you enough to come along to the Wednesday room.

Click Here To Reserve Your Seat

Good fortune,

Nigel

Please contact us at [email protected] for any questions you might have about using Hawkeye Indicators in your trading!

 

A Clever Way To Predict Market Direction With Hawkeye

For many years, copper has been one of the best economic commodity indicators because of its ability to serve as an indicator for various economic trends and equity markets. That shouldn’t be too big of a surprise, since for many years, there has been a strong correlation between economic growth and the demand for copper.

But is this still true? And what does our Hawkeye Trading methodology see in these charts? Even if you don’t trade commodities like copper, there’s an interesting lesson to be learned here.

Based on the monthly chart below, copper has been in a down trend from the middle of 2012, and there is nothing stopping this move down. Notice how I have circled the volume in the lower right corner, and how last month put another red volume bar in. Also, notice how we have 50% of a Hawkeye Pivot being formed at the live edge of the market.

Copper Monthly Chart

If this month closes down, we will get a full Hawkeye Pivot at the top, which should be enough to push this market back down through the red horizontal line. And, as soon as it pushes down through that, we will come out of our congestion and push ourselves down again. So, a close under 2.4060 on the monthly is extremely bearish for this commodity.

Now, let’s look at the weekly chart, as it is telling us a similar story.

Copper Weekly Chart

Notice how I have circled the volume and how we’ve now had four weeks of bearish volume. Also, notice how the Hawkeye Heat Map has gone bright red showing a downtrend has come in. And finally, at the end of this week, how a new trend to the down side has been put in, and how this market has rolled over.

However, the Hawkeye weekly Pivot is at the same price point I gave you on the monthly chart (shown by the horizontal yellow line at the bottom). That has to be broken as well, and I would expect some resistance there.

Finally, if we look at the daily chart, we can see that, yet again, volume showed four days before prices dropped that selling was taking place.

Copper Daily Chart

The Trend dot had rolled over, the volume is red (circled at the bottom), and the Hawkeye Trend dots at the top are showing that this reversal of an uptrend had taken place.

Also, if you look to the left of the chart (before my red circle), you can see that the price just went sideways, and the Trend dot went flat showing you that distribution was taking place, which was confirmed by the volume.

So in summary, Hawkeye is showing you that copper is bearish, which in turn means that the industrial world doesn’t want copper. That’s because we’re not on a building boom or in a tech boom at the moment.

Because of this, we would expect to see more slides in the manufacturing stocks and particularly the Shanghai index.

So, if you want to take advantage of this great trading, and don’t already have our Volume Starter Package, click here

And if you already have the Volume Starter Package and want to step up to the next level, click here

Good trading!

Nigel

We demonstrate this and many other methods in our live demonstration room held every Wednesday, and this is open to everyone. Click this link for more information or to join us in class.

Please contact us at [email protected] for any questions you might have about using Hawkeye Indicators in your trading!

 

How Hawkeye Makes Trading The Yen So Easy And Profitable!

Today, I will analyse the Yen with the use of my Hawkeye indicators. Interestingly, the Yen has recently broken out of a six month trading range on the monthly chart. Also, the fundamentals are that the Japanese economy is fighting deflation. So, they will continue to try and push their currency lower until this deflation is completely out of their system.

If we look at the monthly chart, you can see from the beginning of 2012, where the green dots came in, it’s been in an uptrend. In other words, the Japanese Yen has been weak, and the US dollar has been strong.

USDJPY Monthly Chart

The USDJPY pair has gone from about 75 to over 125, which is a huge run. But more importantly, look at the dotted lines I have put on the chart. The dotted line marked a is drawn off the high of six months ago. And you can see that it consolidated for the period I have marked with a red circle. Also, you can see at the line marked b, it has broken out of that consolidation heading up past the high in 2007 (which is circled in a red over on the left hand side).

So, it looks again that this currency is going to break out to the upside. So, whatever you do, do not even begin to consider going short at this point!

Now, let us have a look at the weekly chart. First off, notice how I’ve I placed three cyan arrows to mark various great entry points.

USDJPY Weekly Chart

Frankly, I could have placed five or six, because the uptrend continued on the monthly. So, if you simply bought the dips on the weekly, you would make substantial profits all the way up to where we are now. Without a doubt, there’s been easy money to be had in this pair.

Finally, let’s take a look at the daily chart.

USDJPY Daily Chart

Of course, since the daily chart is a faster time frame than the weekly, it gets a bit more choppy. But, yet again, I’ve marked three great opportunities to get long in this market with the cyan arrows. So, definitely consider buying the dips, and don’t go short until Hawkeye specifically tells you to.

And just as an aside, PLEASE try to trade the longer time frames. For example, the daily, and if possible, even the weekly. Unfortunately, most Hawkeye traders try to trade the faster time frames.

However, the money is not there. The money is in the longer hauls. That’s where the hedge funds are, and that’s where you should be.

Good trading,

Nigel

We demonstrate this and many other methods in our live demonstration room held every Wednesday, and this is open to everyone. Click this link for more information or to join us in class.

Please contact us at [email protected] for any questions you might have about using Hawkeye Indicators in your trading!

[The cyan arrows are for illustration only and do not form part of the software]

How Not To Lose Money on False Breakouts

In this week’s newsletter, I will consider two different instruments. First, I will revisit the E-mini weekly since I have been discussing it in the last few newsletters. Then, I will do a more in-depth look at gold.

Okay so let’s start with the weekly chart of the E-mini.

Emini Weekly Chart

First, notice how I have placed three red arrows on the chart. Let’s begin with the red arrow on the left hand side. Now, over the last few weeks, I have been saying it is paramount that this level is taken out with the bar, where no part of the bar closes on that dotted line.

You could have been easily suckered into this, because on the second arrow on the top, you can see that the price has come out of the dotted line and no part of the bar touched it. So, you could easily start to think we are on a breakout to the upside.

However, if you look down below (where I placed a red arrow on the volume), you can see that the bar that broke out had declining volume. Now volume, as we all know, is the gas that powers the car. And, if there isn’t enough gas in the tank, the car will slow down. And that’s exactly what happened here.

So, the week that it broke out there was declining volume. That means the professionals were not buying then. The professionals were standing back, and that price move was caused by the amateurs coming in and buying it as they saw the breakout from the previous red arrow from that dotted line.

But we, as Hawkeye traders, know that we have to have a trend in volume to make markets move. So, with a bit of forensic analysis (as I like to call it), you can see that the market didn’t break-out. And, in fact, this week it has closed back inside the range of the original dotted line, so that resistance is there. We now have a new isolated high and isolated low and the markets are going to unfold. We do need to see more volume coming in to get this as a move up.

Now, the next chart I want to look at is gold. As a backdrop, there is something very interesting and fundamental going on at the moment. What I’m talking about is that several countries throughout Europe, including Austria, Holland, Germany, and Switzerland are bringing their gold reserves back from outside of their countries. Could this be the start of eventually going back to a gold standard? It’s certainly very possible.

 

So, with that in mind, let’s go have a look at the monthly chart of gold first.

Gold Monthly Chart

I have circled the volume on the monthly chart down at the bottom. And, you can see that it is totally distribution and accumulation volume that you can see at the bottom of this down move. For example, can see it has been red, red, green, white, white, white, white – i.e. no demand.

But the market hasn’t moved down. If you look at the price, you can see that we have two isolated lows forming a bottom, where the circle is on the price. And, the price is going sideways. So, let’s see what happens with that chart as the months roll out.

Now let’s go have a look at gold weekly . . .

Gold Weekly Chart

Here, you can see on the gold weekly that I have circled the volume again. This is classic accumulation volume (red, green, red, green, no demand). And again, if you look at the price, you can see that the market is going side-ways. For example, look at the flat Hawkeye Trend dots and all the isolated highs and lows.

Certainly, this is a market that it is in accumulation.

So now, let’s move to the daily chart.

Gold Daily Chart

Although this is in an up-trend, look at what has happened. You can see where I have circled the volume at the bottom, how the Heat Map (the bottom indicator on the chart) is dark green, showing us that the bias is still on the up-side. But, for the last ten days, we have had red volume, which means that selling volume is coming in to this market.

But, the market hasn’t gone down. It has just gone side-ways. It came down to where I placed the cyan arrow, where it virtually touched the Hawkeye Stops (which as we know always act as support and resistance) and placed a phantom isolated low where the cyan arrow is.

So, we should expect this to be a low pushing it up. Undoubtedly, this market is highly oversold and one would be expecting a decent rally to be coming in to gold at some stage over the next months. So, make sure you look out for this, and definitely have it on your radar.

Good fortune,

Nigel

We demonstrate this and many other methods in our live demonstration room held every Wednesday, and this is open to everyone. Click this link for more information or to join us in class.

Please contact us at [email protected] for any questions you might have about using Hawkeye Indicators in your trading!

[The red and cyan arrows are for illustration only and do not form part of the software]

The Secret of Combining Triple Volume + Profit Acceleration For SIGNIFICANTLY Boosting Profits

In this week’s newsletter, I will illustrate the power of using triple timeframe volume analysis, along with the Hawkeye Adds algorithm to show how we can significantly boost our trading profits.

CL Intraday
On the chart above, I am displaying the 20 minute bars of the front month of Crude. Under the price bars, I have three plots. On Plot 1, I’m displaying the volume from the 60 minute chart. Plot 2 shows the 40 minute volume, and Plot 3 shows the 20 minute volume. The green vertical line is the open of the London session at 9:00 am GMT, and the red arrow shows you exactly when the trend changes.

Now, let’s look at what the volume plots are telling us about that point in time. Notice how Plots 1, 2, and 3, all have red volume. Also, on Plot 3, you can also see there is a red dot right, followed by another red dot showing ultra-high volume.

So, that is your point of entry. Now, as the downtrend continues, notice the numbers 3, 2, and 1 that appear above the price bars. What this means is that the Hawkeye Adds algorithm has calculated the optimal levels for adding further contracts to the position (an extra 3, 2, and 1). So, along the way, your position would grow from 1 contract, to 4 contracts, to 6 contracts, and finally 7 contracts to boost the overall profits of the trade.

The second red arrow shows you where you should exit the trade. On Plot 1, you can see that green buying volume has come into the upside. While on Plots 2 and 3, it is neutral, no-demand volume.

The other thing to notice is how the trend dots are flattening out at that point and how we even have a close above a trend dot, showing us that the momentum of this down move is finished. So, that would’ve been the best place to exit this trade.

So, what kind of profits are we talking about here? If you would’ve traded just one contract, from the top to the bottom, you would’ve made a healthy 1.70 points. However, by using the Hawkeye Adds profit accelerator, you could have made 4.20 points out of this move. That boosted the overall profits of this move by about 2.5x!

So, a SUBSTANTIAL increase of profits, simply by using the Hawkeye Adds profit accelerator.

If you would like to learn more about the Hawkeye Adds algorithm, CLICK HERE.

Lastly, if you haven’t picked up a copy of the Hawkeye Volume Starter Package yet, please CLICK HERE, and get started using Volume to start increasing your profits today!

Great Trading!

Nigel Hawkes

We teach this and many other methods in our live training room held every Wednesday. Click this link for more information or to join us in class.

Please contact us at [email protected] for any questions you might have about using Hawkeye Indicators in your trading!

[The red arrows are for illustration only and do not form part of the software]

How To Use Hawkeye Indicators To See Topping Volume And Save Money!

In this week’s newsletter, let’s take a look at GDX, otherwise known by its full name, the Market Vectors Gold Miners ETF.

Let’s begin with the monthly chart below. As you can see, we’re in a solid downtrend. We did have some buying that came in last month, that showed in the weekly and daily charts, but it was a high risk entry, as the monthly was still down, and it’s still heading down, as I’m showing with the red arrow.

GDX Monthly Chart

Now, let’s continue with the weekly chart below. As you can see, there was a rally on the weekly, and it went right up to the Hawkeye stops, which showed great support and resistance. Note how it went right up to where I put the red arrow above the trend stops.

GDX Weekly Chart

It also placed an isolated high there, so we are expecting a reversal back down. Now, if you look at the volume (which I have put a red arrow over), you can see there was some green volume, but it was average volume all the way up. And, it wasn’t high enough to get through the Hawkeye stop area.

Now, if we look at the daily chart below, you can see that the two arrows that I placed above the Hawkeye volume show classic topping distribution volume: selling, selling, no demand, a little bit of buying, selling, no demand, no demand, etc.

GDX Daily Chart

And you can also see that the Hawkeye trend dots have gone flat, which means we have entered congestion. Now, I want you to notice how I’ve drawn the line off the last Hawkeye pivot low, and how the price on Friday broke through there and closed quite convincingly underneath it on high-volume.

So, one would expect there would be a reversal back into this downtrend of the monthly. The weekly should resort back into its downtrend, and the daily should come out of congestion to the downside.

So, this is a classic example of great topping volume and a rally within a downtrend up to the Hawkeye stops, on a weekly that showed exactly where the market should turn off an isolated high.

Finally, I would like to comment on my article from last week about Apple, where I was saying that it would really struggle to get through the isolated high. That is exactly what happened this week. Take a look at the chart below. See how it went up and tested it four times, and retreated each time on declining volume?

Apple Daily Chart

Without a doubt, this week is a very important week to see what happens with Apple.

Until next time . .

Good Trading!

Nigel Hawkes

We teach this and many other methods in our live training room held every Wednesday. Click this link for more information or to join us in class.

Please contact us at [email protected] for any questions you might have about using Hawkeye Indicators in your trading!

[The red arrows are for illustration only and do not form part of the software]

Apple: A Screaming Buy or an Overripe Fruit Ready To Fall?

Last week, Apple reported its cash reserves had grown to $178 billion, due to phenomenal sales (74.5 million) of the latest iPhone 6. This massive cash reserve is larger than the total market value of Pepsi, Disney, or Amazon. They also reported the biggest quarterly profit ever for a public company – $18 billion in net income in the last quarter of 2014.

Because of this, the financial news analysts are virtually tripping over themselves with predictions of Apple’s stock price soaring to $140 and above. Activist investor Carl Icahn, who owned 45 million shares of Apple as of last August, claims that the stock could be worth over $203 per share!

Knowing, as we do, that Volume is the only leading indicator, let’s take a look at what the Hawkeye indicators are telling us about the future of Apple’s stock price.

Let’s begin with the monthly chart below. As you can see, I’ve put two arrows on the chart, one at the top, and the other at the bottom. The arrow at the top is pointing at the Hawkeye High Pivot. And you’ll also notice I’ve draw drawn a line across that point, showing you where the price must close above, by the month, to show it is still in this up trend.

Apple Monthly Chart

At the moment, we see it’s stalling out at that level, which is showing resistance. Now, let’s focus on the second red arrow down below. This is showing there’s declining volume in this up move. So, the Hawkeye indicators are telling us not to expect the explosive move to the upside all the pundits on the TV are talking about. However, if there is a close above the line I’ve drawn at the Hawkeye Pivot point (which is at 120), then all bets are off, and Apple could be off to the races.

Now, let’s look at the weekly chart below. I have drawn a line, to show you where that weekly pivot is holding. You’ll also notice the pivot was just hit (where I’ve placed the cyan arrow). See how this occurred on high volume and that the Hawkeye Volume Radar indicator marked the event with a yellow dot?

Apple Weekly Chart

However, if we look at the range of the bar, there should have been a lot more volume to go into that to push it up through that line resistance. So, yes, there was a lot of good news about their cash reserves , but you can see that the price went up and hit its resistance level and retreated from that line.

Now, let’s look at the daily chart below. Again, you can see the resistance I’ve marked with the line. But, if we look at the volume on the daily chart, you can see that we have a typical topping volume profile, where we have red volume, no demand volume, a little bit of buying volume, and then selling volume. So, all of this is showing that it’s going to be a defining week coming up to get Apple through 120.

Apple Daily Chart

We teach this and many other methods in our live training room held every Wednesday. Click this link for more information or to join us in class.

Please contact us at [email protected] for any questions you might have about using Hawkeye Indicators in your trading!

Until next time . .

Good Trading!

Nigel Hawkes

[The red and cyan arrows are for illustration only and do not form part of the software]

Trading The British Pound The Hawkeye Way

In today’s issue of our newsletter, I’ll show how the Hawkeye indicators can be used for trading the British pound against the US dollar.

Let’s begin by looking at the monthly chart. As you can see, the monthly trend dots have gone red, as illustrated by the red arrow I’ve placed on the chart. You’ll also note that the volume indicators and the heatmap are all red.

GBPUSD Monthly Chart

Now, let’s look at the last pivot low. That’s indicated by the yellow dot and horizontal line. If prices break below that, it indicates we will be in a serious down trend.

Looking back to May of 2010, we see the previous low was at 14229. So, if this current trend were to close down through the current pivot low, we very well may be headed down towards 14229.

Now, let’s move on to the weekly chart.

GBPUSD Weekly Chart

As you can see, the weekly chart has broken down from where I’ve placed the red arrow. You can see that prices have closed down below the pivot low point.

Also, notice the evenness between the trend dots in this down trend. This indicates there is substantial momentum to the down side.

Finally, on the daily chart, you can see we’ve just now broken down below the Hawkeye pivot low (the yellow dot with the horizontal lines extending out).

GBPUSD Daily Chart

We see that the GBP held prices within the pivot area for a few days. However, on Thursday, the 22nd of January, we saw the price close down under the pivot, and so we’re now in commencement of a re-entry to the downside (You’ll also note that the Hawkeye Roadkill indicator put in an aggressive entry to the downside).

So, the Hawkeye indicators are telling us that it looks like serious weakness for the GPB. I would expect it to continue on down now, and certainly, given all the evidence we see from the Hawkeye indicators, it’s a great shorting opportunity.

But, make sure you do not go long on this if you’re trading the faster time frames. Only trade in the direction of the slower time frames!

So, I hope you’ve enjoyed seeing how we use the Hawkeye Pivots. Understanding price action with the underlying Volume is the true advantage in trading, and the Hawkeye Pivots is a unique tool that helps us put it all together.

We teach this and many other methods in our live training room held every Wednesday. Click this link for more information or to join us in class.

Please contact us at [email protected] for any questions you might have about using Hawkeye Indicators in your trading!

Until next time . .

Good Trading!

Nigel Hawkes

[The red arrows are for illustration only and do not form part of the software]

Hawkeye Pivots – Trading Crude Oil the Hawkeye Way

In today’s article, I’ll show you how we use the Hawkeye Pivots on crude oil charts to illustrate their value to enhance your trading.

Monthly Chart Analysis

Monthly Crude

If you look at the right side of the monthly chart above, you’ll see there’s a red arrow pointing down. While not part of our software, the red arrow shows the first time price closed under the pivot low extension (that’s the yellow line that’s coming off the last true isolated low).

This breakout was on the 31st of October 2014, and Hawkeye showed the new trend has commenced with red selling Volume, a bright red Heatmap, and declining red Trend dots.

Weekly Chart Analysis

Now, let’s look at the weekly chart.

Crude Weekly

Notice where the red arrow is again. That is where the breakout occurred, when price closed under the last isolated low pivot extension. From there, you can see that the prices are falling and that no pivot has formed all the way down. However, now we are getting to a potential pivot low, and you can see some green buying volume has come in on the weekly chart on the last bar. Keep that in mind as we now move on to the daily chart.

Crude Daily

Here, you can see I have placed a cyan arrow pointing upwards showing us the new pivots and the extension lines (high and low), which are the two yellow lines extending to the right. Notice that the trend dot has gone flat, that the price is going sideways, and that the volume is declining.

(By the way, ignore the current bar, because that was Martin Luther King’s birthday, and the markets were closed at that time.)

Now, notice how on the Roadkill indicator we see two bars of green buying volume coming in. That means, we are hitting a point of congestion on our crude chart. We will only know if that pivot low is taken out if it continues down, and price is at 4455.

Therefore, if we close below the pivot low at 4450, then the downtrend will resume. But, if the pivot high is taken out, which is at 5175, then we will be in a daily uptrend. The bias at the moment is still down, but we are getting congestion bottoms forming, hinting that upwards price action is a possibility.

Conclusion

So, I hope you’ve enjoyed seeing how we use the Hawkeye Pivots. Understanding price action with the underlying Volume is the true advantage in trading. The Hawkeye Pivots is a unique tool that helps us put it all together.

We teach this and many other methods in our live training room held every Wednesday. Click this link for more information or to join us in class.

Please contact us at [email protected] for any questions you might have about using Hawkeye Indicators in your trading!

Good Trading!

Nigel Hawkes

[The red and cyan arrows are for illustration only and do not form part of the software]

Hawkeye Identifies HUGE Market Move!

We are looking for huge moves in grains now. Look at the following charts of the grains. Wheat is at multi-year lows, along with Corn. Do remember, the PEDv outbreak has killed millions of US hogs and they eat corn, so there is lots of supply

Chart 1 –  Wheat Daily Chart

wheat daily

Take a look at the Wheat Daily Chart above. Of course Hawkeye volume picked up the professional selling (indicated by the red arrow).

Chart 2 – Wheat Weekly Chart

wheat weekly

This selling is confirmed by the volume chart on the Weekly Wheat Chart (indicated by the red arrow). What trends!

[The red arrows are for illustration only and are not part of the software]

Hawkeye Perspective

Have a look as well at Hawkeye on the Soy complex. This year has been a near perfect growing season – ample rains and sun.  You will see that Hawkeye Volume is very bearish –  as it is of all the grain complex.

As a note: feeder cattle and live cattle have been a belter of a trend. Be careful, it looks like tops are being put in.

Don’t miss the Gold trade

A few weeks ago I told you that it was looking like a critical few weeks for gold trading. I showed you how Hawkeye showed the weakness in the current downtrend, and I showed you what to look for as the first signs of a new up trend. The weekly Hawkeye stops held (support) and now Hawkeye Volume is showing that buyers are returning to the table, accumulating Gold at these low prices. Hawkeye showed you where the smart money was!

Chart 1 – Gold Daily Chart

Gold 180614

Hawkeye Gold is now going through accumulation (indicated by the red arrow). Do wait until there is break out on high volume through the high that occurred 2 days ago. This could be the commencement of a major trend, so a great deal of patience is in order here.

Chart 2 – GDX Daily Chart

GDX

GDX is an ETF of gold mining stocks, a forerunner of the gold price. Accumulation has taken place (indicated by the red line) and price move has commenced, especially when the last Hawkeye pivot (the yellow dot on the price to the left) is taken out.

[The red arrow and line are for illustration only and are not part of the software]

Hawkeye Perspective
Gold is now at a pivotal point, with the bias to the upside. Both Hawkeye pivots to the left on Gold and GDX have to be taken out to confirm the uptrend.

 

 

A Critical Few Weeks for Gold

The following information arrived on my desk from a well respected source:

“Gold and silver turned in another poor monthly performance with losses of 4.5% and 4% respectively.  Investors are wary of getting long the metals thanks to strong US economic data and lack of inflation.  However, it’s important to point out that both metals are trading at price levels that make it very hard for miners to stay in business.”

But let’s look at Hawkeye Gold.

Chart 1 – Gold Monthly

gold monthly

The Gold Monthly Chart is in a down trend bias but in congestion.

Chart 2 – Gold Weekly

gold weekly

On the Gold Weekly Chart we are at a critical point. The price is hitting against the weekly stops which act as a support (indicated by the red arrow). Remember what W.D.Gann said – price usually goes through support resistance at the 4th attempt, if it does not hold it will be the commencement of weekly down trend.

Chart 3 – Gold Daily

gold daily

The Gold Daily Chart is in a down trend. However, there are narrow bars on declining volume (indicated by the red arrow). This is usually the first sign of congestion and accumulation prior to a new up trend.

[Please note the red arrows are for illustration only and are not part of the software]

Hawkeye Perspective

We are at the crossroads here. The Gold price needs to hold on the Weekly Chart, and then you will see the Hawkeye Volume indicator start showing some green volume bars as the majors start accumulating Gold at these low prices, before the trend runs up. But wait – Hawkeye will show where the smart money is.

Major clue the world market is on the up

This week I want to show you how copper is demonstrating that the world is coming out of recession and how this vital component in all building, electrical and industrial production is being bought.

Chart 1 – Copper Weekly Chart

copper weekly

Since March 21, copper has been in accumulation mode. You can see 8 weeks of buying as major buyers step in and commence accumulation (indicated by the cyan arrow up and the green Hawkeye Volume bars).

Chart 2 – Copper Daily Chart

copper daily

On April 24, Hawkeye gives an entry signal (indicated by the cyan arrow). All trends and volume now in place – this market has been accumulated. The next phase is a price move up until demand is fulfilled.

[Please note the cyan arrows are for illustration only and are not part of the software]

Hawkeye Perspective
All conditions are in place for copper to work its way higher. Remember, trends rarely go straight up, but zig-zag to higher price levels. But there is little downside risk at the moment.

The ‘Its easy to trade’ gang are out in force..a must see event, and one to watch

This week Mike Smith reports direct from the Hawkeye Options desk.

Here we go again – out from the woodwork they come…
Its earnings season and so out pop the latest plethora of NEW; INNOVATIVE; EASY; PROVEN etc. etc. headlines about a strategy that has been around as long as options have been in existence.

They say straddles and strangles are the way to trade a high volatility market (by definition it isn’t a volatile market by the way – just look at where the VIX is – there is a difference between choppy and volatile – a later discussion perhaps).

They will promise that this new (lol!) innovative strategy, where you buy a call and a put, an each way bet if you like…as THE ONLY way to make money in this market

(AND of course Barracuda at 191% end of day last session in less than 7 months is evidence that this is nonsense).

They will fail to mention that options prices go up pre-earnings – a little thing called implied volatility – (which is in simple terms, a forward looking measure based on how likely something could move from its current position – in an individual option position there is NO time when this is at a temporary high just before an earnings report). So you can pay over the odds for a call and pay over the odds for a put, and the underlying has got to make a massive movement for you just to break even.

Perhaps we will run a session on this, as there are ways to overcome such issues, but we have other fish to fry right now…just be aware.

A happier note…
Onto the happy stuff. As we are in week 1 of earnings season, I have put a blog post up at HawkeyeOptions.com that may be interesting. This explores the reasons why the pessimism pre-earnings (as seen in the recent market pullback) may lead to a continuation of the bull market we are still in (see the weekly trend in the SPY). You can read more here.

And after earnings..?
So, we are in a new quarter and as usual I am going to run a FREE open session, which looks into the crystal ball (which has been on the button the last 6 quarters these have been running).

Where you will hear

  • Our predictions for US and global equity markets this quarter.
  • Which strategies may work and which to avoid (as they are likely to rip away huge chunks of your capital).
  • The 5 things you MUST monitor this quarter to ensure you are at the front of the pack when things are likely to change.
  • Our predicted date for the next market correction and the catalyst that may drive it.
  • Where next for precious metals (and this may surprise you)?
  • And we will be revealing 4 stocks that are most likely to outperform the market between now and the end of June.

Although with an equities/options/ETF bias, whatever you trade this is ESSENTIAL information. You can register here.

This is simply a service we offer to all those who have expressed an interest in what we do and is a NO SELL zone session.

Feel free to share this link with others as it IS an open session.

And finally..

Watch YAHOO…yesterday’s earnings attracted some massive buying interest in after hours trading.

As always…trade safe and learn with passion.

Mike Smith

Hawkeye Identifies Two Explosive Commodities

Over the previous weeks, Hawkeye has identified great trading opportunities in Stocks, Forex, Futures and Commodities. Today, we want to look specifically at the Coffee and Sugar futures markets, with a particular focus on how Hawkeye Volume shows identifies volume accumulation prior to the explosive breakouts in both of these markets.

From Chart 1 below, just look at the power of accumulating volume and the price breakout. The first two cyan arrows (drawn for illustration only) are showing accumulating volume. The third cyan arrow shows volume absorption, and the explosive breakout to the upside.

Coffee Daily

Chart 1 - Coffee Daily

From the Sugar Daily Chart 2 below, we see the same phase of the market as coffee showed prior to its price move. Both cyan arrows show volume accumulation. Wait for the Sugar Weekly chart to confirm a price move with green (buying) volume and the heatmap turning dark or bright green.

Sugar Daily

Chart 2 - Sugar Daily

Note: the cyan arrows are placed for illustration only, and are not part of the software.

Hawkeye Perspective

Accumulation volume is a great sign of future price action. The Hawkeye Volume indicator shows this with great accuracy. See how Hawkeye Volume indicates a break-out to the upside. As we stated here last week, this market is providing a great trading opportunity. Patience has it's reward.

Learn How Hawkeye Volume and Trend Show End of Trend Run (Not a New Entry)

Over the previous weeks, we have produced information that identifies great trading opportunities in Stocks, Forex, Futures and Commodities. Today, we want to look specifically at the Sugar (SB) futures market, with a particular focus on how Hawkeye Volume and Trend shows the end of a trend run, but not necessarily a new entry.

Chart 1 - Daily

This Sugar daily chart shows an extended daily trend down. Then we get stopping Volume coming in (indicated by 2 red dots on the Volume under the cyan arrow), pushing the market up.

sugar daily

Chart 2 - Weekly/Monthly

Both these Sugar charts (weekly and monthly) are in down trends (indicated by the red arrows). This prevents a long entry on the daily chart. However "6 Ways a Market Moves" shows a weekly congestion entry.

sugar  weekly monthly

Note: the red and cyan arrows are placed for illustration only, and are not part of the software.

Hawkeye Perspective

The market looks like its moving into volume accumulation mode as it bottoms on the weekly chart. This could lead to a congestion entry. Wait and see how Hawkeye Volume indicates either a break-out to the upside or a reversal into the monthly downtrend. This market will provide a great trading opportunity soon. Have patience.

See Stopping Volume in Action

The silver market has fallen over 30 dollars since the high of 50 dollars and has been making lower highs and lower lows since May of 2011. However the weekly ranges have been getting smaller and smaller. There is now attendant volume i.e. accumulation volume on the daily chart (see cyan arrow) and also on the weekly chart (see cyan arrow).

silver daily

 

silver weekly

Hawkeye perspective
This is showing classic stopping volume in the down trend and is the precursor of an up move.

 

Look at this Consolidation Volume!

Sugar (SB) is starting to show signs of strength. Last Friday’s volume was the highest volume since June of this year.

When you get this strong volume on large up-moves, it is a very positive sign of strength, and could well be the commencement of an uptrend. But, you have to be patient. Looking the the chart below, you can see that there is resistance at $17.50, where the yellow dotted line is.

Daily Chart

Potential breakout of SB shown by strength of volume and price action.
Potential breakout of SB shown by strength of volume and price action.

The first cyan arrow up is showing you that there was very high volume. The yellow Hawkeye Volume Radar dot placed on the Hawkeye Volume indicates this high volume event, and the Hawkeye Trend dot changes to green, indicating that at this point an uptrend has begun. The second cyan arrow is displayed on a three-day Hawkeye Roadkill setting. You can see that the white dots (an indication of consolidation in the three-day trend) shows the three-day chart is in consolidation, and the green three-day volume bars show that buying volume has begun.

The Hawkeye Perspective

Everything is now virtually in place for a the commencement of a long trend run, but it would have to close above $17.50 to show conviction (the strength needed for continuation beyond the resistance level).

Classic Volume Accumulation – get ready for breakout

Copper futures traded at the highest level since June on Monday and are now showing classic accumulation getting ready for an upward breakout.

Let’s look at the charts:

Weekly Chart

trade copper weekly chart

At point 1 there is a wide bar down shown in magenta on the price indicating above average volume shown as the yellow dot on the Hawkeye Volume indicator below.

The market then continues down but at point 2 goes sideways into congestion. The yellow dot below the price at point 2 is a Hawkeye pivot which acts as support and to push the market up.

At point 3 a second pivot occurs which is higher than the previous pivot (point 2). This is a strong sign of strength. Also note, green buying volume came in showing for that week there was buying volume — all confirming a potential breakout.

Daily Chart

trade copper daily chart

This clearly shows buying has commenced and is in an uptrend. At point 1 the Hawkeye Roadkill indicator, which I have set to three days, places a cyan dot indicating a trade entry and the Hawkeye Heatmap indicator has turned bright green indicating all trend speeds are positive.

The Hawkeye Perspective

Be patient until the weekly chart goes long which should be at this week’s end if this rally is confirmed.

 

Learn why Hawkeye Pivots are so powerful

I often get questions on how to interpret Hawkeye Pivots (the yellow dots on the price bar).

As a general rule, when you see a pivot, it suggests the market has reached a temporary peak/low, which means that for the next three, five or seven bars it is likely to go against its trend or to indicate an exhaustion or turning point of the existing trend.

Lets look at the charts:

The chart on the left (daily) shows where the entry to the short side was triggered (Red down arrow) confirmed also by the weekly chart on the right (Red arrow down). A short trend is identified by the Hawkeye Trend’s red trend dots.

Now lets look at the Pivots:

On the daily chart (left) prior to the red arrow, there was classic congestion with the market moving between pivot high and pivot low and then BAM! a breakdown (shown by magenta Hawkeye Widebar), which was triggered by the pivot on the weekly chart (right) that is just before the trend turns red. All volumes agreed so it was a very low risk entry. But as I write there is a new pivot being set up on the daily and also on the weekly which could terminate this down move. Watching the Hawkeye Volume will give you the information to support this possible trend termination.

Aug 10 pivots

The Hawkeye Perspective

The Reserve Bank of Australia has just dropped rates to their lowest, 2 1/2 percent, which could be the fundamental news the markets required to terminate this move, so if short, look for Hawkeye Volume to show you congestion and exhaustion, and look to the pivots for the market direction.

Crude Oil Goes Bullish – Don’t Miss Out

The crude oil market ($CL_F) has been rather volatile lately, with the past few weeks showing signs of strength in the overall economy. The stock indices have pushed into higher price areas pulling crude right along with them. It’s nice to see some of the commodities coming out of the “dog house”, after having been beaten up for most of the year.

However, at Hawkeye we like to take a step back and look at the bigger picture because sometimes you can be so close to the action (the trees) that you can’t recognize where you are (the forest). And looking at volume is the EDGE that brings clarity back into the picture. Let’s look at the Monthly Crude Oil chart, highlighted by Hawkeye Indicators.

Crude Oil ($CL_F) Monthly chart showing an initial green trend dot change.
Crude Oil ($CL_F) Monthly chart showing an initial green trend dot change.

Take a look at the CL Monthly chart above… it is the first time we have a green trend signal in almost two years. Notice the trend of buying volume coming into the end of this rather lengthy consolidation area (white trend dots). The level of volume on the last four months has consistently been higher than the volume in any other month during 2013… a good indication that buying volume is building and accumulation is taking place. Now, let’s take a look at the Weekly CL chart.

Weekly Crude Oil ($CL_F) chart.
Weekly Crude Oil ($CL_F) chart.

Again, we see a nice bullish trend building (green trend dots), supported by buying volume (green volume bars). The Heatmap (bright green area below volume) is bright green too, indicating momentum has become strong. And finally, let’s look at the daily chart.

Crude Oil ($CL_F) daily chart.
Crude Oil ($CL_F) daily chart.

The bullish trend that started early July 2013 (shown by the green trend dots) on the daily has slightly corrected, but is showing signs of renewal. The Trend dot will change from white to green, indicating a resumption of the long trend shown in both the Monthly and Weekly charts. This will generate a Roadkill signal and should be enough to turn both the longer-term (weekly) volume green and the daily Heatmap from dark green to bright green.

The Hawkeye Perspective

With the overall commodity markets in “major correction” mode, it’s important to keep watch on the ones that show us that strength is coming back into play. By looking at the Hawkeye Volume, the only leading indicator of price action and market sentiment, we clearly see bullish sentiment returning to the crude oil market. Taking advantage of harmony in the charts when all three timeframes agree is very rewarding.

Learn these typical end-of-trend volume patterns to become a proficient trader

This week’s example is the coffee commodity which has has been in a downtrend since October of last year.

In the weekly Chart 1, there was a wide bar shown in magenta and four weeks of tight ranging bars (cyan arrow) unable to break under the dotted line of support.

In the daily Chart 2, it reversed to the upside and then tested the market with a push down (red arrow) on average volume. This does not show a new entry but rather a termination of the dominant weekly downtrend. The last bar is a test down on average volume. Classic end of trend pattern.

trend run pattern

The Hawkeye Perspective

The market should now consolidate at these levels and when you see green volume on the weekly chart (providing the daily chart keeps in uptrend) this will be the commencement of a new trend run to the upside. In other words, the market at the moment is in its accumulation phase.

Volume is King When Trading Gold.

Some weeks ago, Hawkeye alerted you to the fact that although all the pundits were talking gold up, the Hawkeye Volume algorithm was showing weakness. Let’s look at the charts.

Weekly Gold Chart
Weekly Gold ($GC) trend.

Chart 1 Weekly Gold

Hawkeye has been short since last November at $1,684 (see red arrow above).

Daily Gold ($GC) chart showing possible entries using Hawkeye.
Daily Gold ($GC) chart showing possible entries using Hawkeye.

Chart 2 Daily Gold

The three red arrows show where you could have entered fabulous trades using the Hawkeye Roadkill indicator. With gold in a strong downtrend, the Hawkeye Roadkill identified three possible entries on April 13, May 17 and June 18 that would’ve generated substantial profits!

The Hawkeye Perspective

The market is in a major downtrend. The next major resistance price level is $1,020. Expect to see a major price move to the downside on high volume followed by a narrow bar with light volume.

Remember: markets don’t continue down on light volume so we must wait to see the above profile then expect an explosive up move form this heavily oversold position.


Hawkeye Education

Trading any market without education on the six ways the market moves is like walking into a casino with a stack of dollars – you’re relying on luck rather than a methodology.

Learn the “Six Ways a Market Moves,” the key to being a great trader, at the next Special 2 1/2-day Hawkeye Seminar in Santa Ana, CA on September 21-23, 2013.

Click here to express your interest in the seminar.

There’s money in trading soybean futures.

Just as you can extract oil from soybeans, you can extract money from the market trading soybean futures.

Soybean futures have had a large price move to the upside over the past two weeks. The price is currently just below strong resistance at 1350 and is displaying classic congestion. (See the yellow dotted lines).

There is a Hawkeye pivot (yellow dot) pushing the market down and both daily and weekly Hawkeye Volume algorithms are showing selling (red arrow).

Daily soybean chart.
Daily soybean chart. Congestion is shown by the dotted yellow lines.

The Hawkeye Perspective

If you are long, lighten up your position. If you are in no trade, wait for the congestion zones (yellow dotted lines) to be broken… but if they are broken, it must be with red selling volume on the daily and the weekly charts, showing that the bias is to the downside.

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Hawkeye Education

Trading any market without education on the six ways the market moves is like walking into a casino with a stack of dollars – you’re relying on luck rather than a methodology.

Learn the “Six Ways a Market Moves,” the key to being a great trader, at the next Special 3-day Hawkeye Seminar in Santa Ana, CA in September.

Click here to express your interest in the seminar.

 

Everyone went crazy over Gold, but not Hawkeye!

With the crisis in Cyprus unfolding, every pundit and novice commentator was calling gold to new highs. However, the Hawkeye system was in opposition, as the only true leading indicator — volume — did not confirm. The Hawkeye Volume indicator was built on Volume Spread Analysis, and is quite complex… but we made the display very simple and intuitive, using only three colors to identify the presence of buying, selling or neutral volume in the market.

The power of Volume Spread Analysis is revealed in Gold.
The power of Volume Spread Analysis is revealed in Gold.

 

Refer to the chart above for the discussion that follows:

1. Although the daily went into an uptrend (green trend dots),
2. notice there was no confirmation of either green buying volume or green trend from our unique Roadkill indicator, showing us what the weekly time frame was doing… neutral volume and red down trend.
3. A pivot low (yellow dot) with 2 bars of buying volume pushes market up 3 bars in an overall down trend.
4. LOW RISK ENTRY: a pivot yellow dot formed, and neutral volume followed by selling volume pushes market down, and it closed down $25.30 on the week.

Warning:
The weekly volume from the previous week was green, but the close was less than the open showing weak conviction. At the end of the week, April 12, 2013 was a widebar (twice average true range x 20 bars). The close was in the bottom 40% of the range. This confirmed the Hawkeye weekly trend that has been place since November 2, 2012.

Remember the Hawkeye widebar rule: we now expect the market to consolidate hereuntil there is a weekly close lower than this widebar.

This is the power of Volume Spread Analysis!

Oil continues to trade in congestion

oil futures chart
January WTI Oil Futures – Daily Chart

January oil futures closed marginally higher yesterday, closing the oil trading session at $87.38 per barrel, having touched an intraday high of $87.89 per barrel, before ending the oil trading session just 10 cents per barrel higher. The current lack of direction for crude oil has been a feature of many markets over the last few weeks, as commodities in general trade in a consolidation phase as we move towards the year end, with the price congestion for oil clearly defined by the pivots above and below this current range.

To the upside, we have two isolated pivot highs, just below the $90 per barrel level, and below, two isolated pivot lows in the $85 per barrel price area, which define the limits of the current congestion phase. The most recent of these was on Tuesday, which is pushing the market lower as a result.

The Hawkeye widebar of early November was never validated, suggesting a lack of downside momentum, with the market pulling back to trade within the spread of the bar and failing to continue the bearish trend, with the daily trend now in transition to white. The three day trend however remains firmly bearish, with no transition as yet, and supported by heavy selling volumes in this time frame.

On the daily chart buyers have returned, but counterbalanced by yesterday’s rising selling volume in a narrow spread day. The Hawkeye Heatmap is in transition from bearish to bullish, but has yet to complete the full cycle, and the key now for the oil market, is whether we see a break above or below the current congestion. For a move higher, the $90 per barrel level is now key, and if this holds then we can expect to see a retest of the deep price congestion in the $92 per barrel area and beyond. A break below the $85 region, could see the market sell of sharply again, and test the $78 per barrel level in due course. As always, Hawkeye will reveal the future direction of the market, using volume as the only leading indicator.

Silver price surges higher following breakout

September silver futures daily chart and market analysis
September silver futures – daily chart

The price consolidation that has been a feature of gold, has also been reflected in the silver market, with silver futures trading in a narrow range, testing $26 per ounce to the downside and $28.50 to the upside, and developing a strong area of price congestion as a result. Both these levels have been clearly defined by Hawkeye with a series  of isolated highs and isolated lows with the yellow pivots. The September silver futures contract ended the week at $31.37 per ounce.

The breakout finally arrived two weeks ago, and was in fact signalled early with the Hawkeye Roadkill delivering an aggressive volume entry, followed shortly after by a conservative trend entry, which was also coupled with rising volume on the daily chart, a strong sign that the breakout was valid. The three day trend duly followed suit moving from congestion into bullish momentum, giving added significance to the move higher.

With such a strong series of signal in place, and the Hawkeye heatmap confirming the bullish tone, we can expect to see silver prices continue to climb higher, and a test of the $36 per ounce region, last seen in March this year, now seems likely. With the strong platform of support in place, this is adding further to the bullish outlook for silver in the short to medium term, which reflects the picture for gold.

If you would like to see Hawkeye in action, simply click the link below to join one of our Free Live Training Rooms where we trade using the full suite of tools and indicators across all the markets.

September soy bean futures continue bullish trend

september soy bean futures on the daily chart
September soybean futures – daily chart

The daily soybean chart has been in a strong bullish uptrend since the breakout of late June and indeed has been one of our star performers in the soft commodities sector.The initial breakout on the daily soybean chart was first signaled by Hawkeye back in mid June and following a period of sideways consolidation finally breaking through the $1450 cents per bushel, which has since provided a strong platform of support for the surge higher.

Throughout July and August the commodity then consolidated in the $1550 to $1690 per bushel area, which was well defined  by the Hawkeye pivots to both the upside and the downside.  The next leg up in the move was once again confirmed by Hawkeye with a conservative volume signal which arrived five days ago on the daily chart and with bullish volume in both timeframes and a bullish trend on our three day chart, soybeans now look set to test the $1800 cents per bushel price point in due course. The September soy bean futures closed on Friday at $1764.50 per bushel.

If you would like to see Hawkeye in action, simply click the link below to join one of our Free Live Trading Rooms where we trade using the full suite of tools and indicators across all the markets.

Gold bullish following recent breakout

gold futures daily chart
Gold futures – daily chart

Gold bugs are once again happy this week, and the recent breakout for gold continues to signal further bullish momentum, with spot gold just failing to touch a high of $1700 per ounce this week for the first time since March, and finally closing the week at $1691.18. Gold futures ofcourse reflected this bullish momentum, and indeed Hawkeye gave us an early entry signal on the daily chart, with a conservative trend Roadkill. This upwards momentum was almost inevitable following the extended period of sideways congestion, and in particular with the strong platform of support in the $1550 per ounce region, clearly defined by the Hawkeye pivots, a level that was never tested.

The other contributory factor is of course the short term weakness in the US dollar which is likely as a result of the FED’s clear signal of further stimulus to the economy, and should this weaken the US dollar further, then gold prices are likely to extend the recent breakout into a longer term trend. As mentioned above, Hawkeye has already given us an initial entry signal, and with the Hawkeye Heatmap now bright green and coupled with buying volume in both timeframes, we can now expect to see gold prices breach the $1700 per ounce level next week, and extend gains further, with a bullish trend which could see the precious metal test the $1800 per ounce level in due course.

If you would like to see Hawkeye in action, simply click the link below to join one of our Free Live Training Rooms where we trade using the full suite of tools and indicators across all the markets.

This Week’s Market Forecast – Risk On Returns!

Last week was the worst Thanksgiving week on Wall Street since 1941. Traders and investors reeled from the problems in Europe, as well as the collapse of the US budget deficit talks. The S&P 500 fell almost 5% on the week, closing just below the key 1160 level. The Dow was also down almost 5% over the week, and the Nasdaq was down by 5.1%.

The selloff really took place following the disastrous German bond auction which saw demand for the 10 year Bund at its lowest since the euro was created. Investors rushed to safety but redefined safety to exclude Bunds, moving instead into US Treasuries, UK Gilts, and Nordic Bonds.

With investors shunning German Bunds, the euro duly collapsed, particularly against the US dollar as the EURUSD tested the 1.32 level before moving back higher. As one commentator has said, this now appears to be the “apocalypse” trade – if German bonds cannot attract investors, and are no longer considered a safe haven, surely it’s now all over for the euro?

As always, nothing is quite as it seems and this may be a hasty conclusion – at least for this week!! The German 10 year bond auction may have gone badly but short dated German debt, known as Bubills, have never been in such high demand even with yields turning negative. In other words, if investors are willing to PAY to lend to the German government, it is hardly a sign of deep fear about Germany or even the euro.

Germany is not under threat – yet – but traders and investors are increasingly trading the euro and Germany together. Since September, the value of the euro against the US dollar has moved almost inversely to German credit default swaps. For those of you who may not know, a credit default swap is a measure of how likely a country is to default on its debt. In other words, traders and investors now care far more about whether they will get their money back than how much they can earn. This also makes them super-sensitive to any hint of danger which leads to much greater market volatility.

The start to this week’s trading has seen the market determined to shake off last week’s doom and gloom by seizing on record Black Friday retail sales and reports that French officials are pushing for a deal on Eurozone fiscal union. This has helped to reverse some of last week’s heavy losses with the US markets having their best days so far in November, with the S&P moving almost 3% higher, while on Monday all the DOW 30 stocks ended higher too.

It remains to be seen whether this swing higher will be maintained, not least because the $VIX – although managed to close lower on Monday – which is positive for equities, is still above 30. If the $VIX does manage to breakdown and move back towards the mid-20s then we could see a rally moving forward into December.

What is also interesting is that according to the latest CFTC data, net euro shorts have also fallen to 85k from last week’s 100k plus. In other words, we could be seeing a short term bounce higher for markets and even the start of a “Santa Claus” rally.

However, with this week’s fundamental news focusing on employment with the non-farm payroll (NFP) release, due on Friday, traders and investors need to take care. The first big number traders (and investors) should watch is the ADP release on Wednesday, a precursor to the NFP. Over a few months this once reliable release, which is based on payroll figures, has become a little less accurate in forecasting the NFP data two days later. Previously, it had always given traders a “heads up” on the Friday data but recently has become increasingly inaccurate in these volatile markets.

Wednesday’s forecast is for a number at 131k, up slightly from last month’s 110k. This is followed by Canadian GDP which is forecast to come in flat at 0.3%.

Thursday’s big number comes from China with the PMI, which is forecast to show a decline from last month’s 50.4 down to 49.8. So expect to see this reflected overnight in the Asian trading session should this number come in wildly at the odds with the forecast.

Thursday sees the unemployment figures in the US, which are forecast to come in flat but we also have the ISM data – an equivalent of the Chinese PMI. Traders and investors watch the ISM as it is considered a leading indicator of the economy because it is based on a large survey of purchasing managers of major companies. Any number above 50 indicates an economy that is expanding and below 50 suggests an economy that is contracting – so this is a very important number.

The week ends, of course, with the general razzamatazz of the NFP – a release which will affect all markets. The forecast is for an increase from 80k last time to 119k this time. This release always causes markets to over-react and traders should wait for any volatility to die down before entering any trade.

Hawkeye users can, of course, trade these markets with confidence because Hawkeye has been designed:

  1. To give traders the edge needed to succeed, as it gets them onto the right side of the market time and time again.
  2. To help traders control their emotions by giving them the confidence to stay in.
  3. To help traders control their risk by giving them clear signals of when to stay in and when to get out, thereby protecting your equity.

All of these things are vital in difficult and turbulent markets such as these! But how is Hawkeye able to do this?

Because Hawkeye has been created to exploit the power of the only leading indicator that traders and investors need, which is VOLUME. This is the foundation stone of Hawkeye on which all the indicators are built. So regardless of whether you are a day trader, position trader, swing trader, scalper, or any other kind of trader, VOLUME should lie at the heart of your trading.

As an example of why volume is such a powerful indicator, Nigel was discussing the gold price in Friday’s trading room. As many of you know, gold has recently had a significant pullback with many questioning whether the recent bull run has now ended for the precious metal.

Indeed in last week’s trading room, the monthly chart was showing some significant resistance as the volume has started to change from green to white (or neutral). In addition, the Hawkeye Heatmap on the weekly chart is also turning dark red – all signals suggesting we can expect to see a further pullback for gold. The daily chart also confirms this view with the short term trend now also turning red, selling volume clearly evident over the last week and any break and hold below the $1600 per ounce level could see a further decline for the metal in due course.

If you would like to see Hawkeye in action and how we use these tools ourselves, then simply sign up for one of the FREE Live Training Rooms! Become the trader you deserve to be!

Nigel Hawkes’ training room covers the commodity markets, where he explains his latest trades and how to select low risk, high probability trades before moving onto the day trader’s favorite instrument – the e-mini. Here you will be able to see the genius that is Hawkeye as Nigel uses the Hawkeye GearBox and GearChanger, two unique indicators to Hawkeye, which ensure we trade at the right speed and in harmony with the market.

To register for our Free Live Training Room each Thursday, Register Here! Forex begins at 8:00am, and Futures/Equities begins at 9:30am, Eastern US time.

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